For millions of dentists, optometrists and physicians, owning their own practice means securing a piece of the American dream, the culmination of a lifelong goal. Owning a practice provides more autonomy, more flexibility, and in many cases, more profitability than working for someone else or a chain practice.
Whether you’re just starting out from medical school, or you’re taking over after a partner retires, owning a practice is a thrilling and time-consuming venture. It’s all too easy to let your excitement direct your course. Are you sure you’ve prepared for all the tiny details that can make a big difference?
Take this short quiz and examine the answers to see if you’re ready to buy a medical practice:
ARE YOU WORKING WITH PRACTICE ADVISORS?
A. Yes, and we’re already working on acquiring a practice!
B. No, but I plan to enlist some soon.
C. No, I’m ready to sign the papers.
Not only should you have answered “A,” but you should have enlisted the service of practice advisors as soon as you started considering purchasing your own practice. These professionals have a better idea of what may be coming onto the market, and they can connect you with lenders and others who can ensure that you’re getting the best value. They can also look at overall market and real estate trends over the course of several decades, which is vital if you plan on making a long-term investment of this significance.
HOW LONG DOES A PRACTICE VALUATION TAKE?
A. One to two weeks.
B. A few months.
C. A year or more.
While there is some variation, a practice valuation will generally take a few months to complete. Don’t be in a hurry: this is one of the most important steps you take on your journey to practice ownership. After the valuation, negotiations begin, and they can also be time-consuming. Remember: it’s more important to take your time to be sure this practice is the right fit for you and your goals. Read more about preparing for the financial journey of buying a practice.
HAVE YOU WORKED WITH AN ACCOUNTANT TO DETERMINE THE PROFITABILITY OF YOUR PRACTICE VS. ANY DEBT OBLIGATIONS YOU HAVE (STUDENT LOANS, CAR PAYMENTS, ETC.)?
A. No, but I have done my own budget.
B. I am working with an accountant.
C. I have enough in the bank to pay my bills.
As the cliché goes, the devil is in the details. You should have answered “B.” Working with an accountant or practice advisor will help you arrange your personal finances (and therefore, get better loan interest rates). Don’t make the mistake of thinking that your new practice will help finance a new house or new car. Be sure you’ve worked with your accountant to get a real picture of the practice’s health. An in-depth assessment is vital to ensure nothing has been overlooked.
DO YOU HAVE A TRANSITION PLAN?
A. I have a start date.
B. I have an idea of how we’re going to transition.
C. I have a detailed plan.
Obviously, the more detailed your transition plan, the better—so “C” is the appropriate answer. Be sure to get everything in writing and have your practice advisor professionals review it. Remember, if you are new to the practice, it’s important to give patients time to “get to know you” before you completely take the helm—otherwise, they may leave. Also, be clear on what your employees’ expectations are—for example, will they keep the same wages and benefits as they had before?